Provincial Government: North West Province and Another v Tsoga Developers CC and Others

In July 2008, the Department of Public Works awarded a tender to a joint venture between Tsoga Developers CC and Ilima (Pty) Ltd to construct Brits Hospital for R456,548,505. In August 2009, Ilima was liquidated. Although the Department was informed in October 2009, it did not terminate the contract immediately. Progress on site was unsatisfactory and the contract was eventually terminated. Tsoga refused to vacate, claiming a lien and damages of R30,647,381.91. The Department made a written settlement offer of R22,608,794.39, which Tsoga accepted. When the Department failed to pay, Tsoga obtained a court settlement order on 16 May 2013. The Department brought an unsuccessful rescission application claiming fraud and lack of mandate. After withdrawing leave to appeal, the settlement order stood. In September 2014, the Sheriff attached 44 vehicles. A November 2014 agreement acknowledged debt of R47,002,201.57. After R20 million was paid, Tsoga obtained a writ in March 2015 for R30,476,839.71 from a Department bank account. The Provincial Government and Director-General sought urgent interim relief to halt execution pending Part B review proceedings. The High Court (Djaje AJ) refused interim relief. The R30,476,839.71 was paid to Tsoga's attorneys and held in trust.

• Whether leave to appeal should be granted against the refusal of interim relief
• Whether it was in the interests of justice to entertain a direct appeal to the Constitutional Court
• Whether the writ of execution was issued in violation of section 3(4) of the State Liability Act
• Whether the attachment and transfer of funds from a government bank account violated section 226 of the Constitution
• Whether the applicants demonstrated irreparable harm
• Whether the applicants had prospects of success in the pending PAJA review
• Whether res judicata applied to the settlement order of 16 May 2013

1. Condonation of the late filing of the applicants' written submissions is granted. 2. Leave to appeal is refused. 3. The applicants must pay the costs of the first and third respondents, including costs of two counsel.

1. Leave to appeal directly to the Constitutional Court against refusal of interim relief will only be granted in exceptional circumstances where the interests of justice so require. 2. When considering whether to grant leave to appeal interim relief decisions, courts must balance multiple factors including: (a) the kind and importance of constitutional issues raised; (b) irreparable harm; (c) whether the interim order has final effect; (d) prospects of success in pending review proceedings; (e) whether the appeal would usurp the review court's role; (f) whether relief would trespass on other branches of government; and (g) whether the appeal would lead to piecemeal adjudication or waste of resources. 3. Applicants seeking to demonstrate irreparable harm must provide specific, substantiated evidence with sufficient detail (including budgets, allocations, expenditures, and specific projects affected), not merely bald assertions. 4. Once a settlement agreement has been made an order of court, it is an order like any other and can only be set aside through legally cognisable processes such as rescission. The order brings finality to the dispute and renders it res judicata. 5. Court orders are distinguishable from administrative action in that courts may disclaim preceding court orders that are nullities on their face without formal setting aside, but this applies only where the nullity "jumps out of the page" (as in cases where a court clearly lacked jurisdiction), not where proof of underlying grounds is required. 6. Section 165(5) of the Constitution requires that court orders bind all persons and organs of state to whom they apply. Deliberate non-compliance with court orders by the State undermines the dignity, accessibility and effectiveness of courts and the constitutional right of access to justice. 7. The attachment of state monies in violation of the procedural requirements of the State Liability Act implicates the principle of legality and the rule of law, as all public power must be exercised in accordance with law.

1. The Court noted but did not decide complex questions regarding section 226 of the Constitution, including: whether "withdrawal" includes attachment of state monies in satisfaction of judgment debts; whether judgment debts constitute "direct charges" against Provincial Revenue Funds; whether monies in departmental accounts have been "appropriated" under section 226(2)(a); and whether the State Liability Act scheme permits attachment of state monies at all. 2. The Court observed that these constitutional and public finance questions raise serious implications requiring fuller argument and are not appropriate for determination in the context of interim relief applications. The issues would benefit from the views of other appellate courts before reaching the Constitutional Court. 3. The Court commented on the practical considerations regarding sovereign default and the attachment of state assets, noting that while attachment of state monies raises concerns about bringing the State to a halt, similar effects could result from attachment of other movable assets like vehicles and equipment. 4. The Court expressed concern that the Constitutional Court is not well-suited to hear urgent matters due to its composition (11 members with a quorum of 8), recess periods, and the geographical dispersal of members. 5. The Court emphasized the importance of the Supreme Court of Appeal and other appellate courts within the court hierarchy, particularly now that the Constitutional Court's jurisdiction extends beyond purely constitutional matters, as these courts' views enrich Constitutional Court jurisprudence. 6. The Court noted with concern the applicants' attitude of not being prepared to make any provision (even as a contingent claim) for satisfying the judgment debt, describing this as "particularly disturbing" and evoking "dismay." 7. The Court observed that while the Attorneys' Fidelity Fund provides protection against loss through attorney defalcation, making the risk of the money being frittered away unlikely, this was not pursued in argument. 8. The Court distinguished between cases where settlement orders may be nullities (Changing Tides and Motala) and the present case, but expressly declined to pronounce definitively on what those cases held, stating "it is not necessary for present purposes to pronounce one way or the other on what they held." 9. The Court made observations about the proper application of Eke v Parsons, clarifying that the requirement that settlement agreements accord with the Constitution and law applies at the stage when the court is deciding whether to make the agreement an order, not as a basis for subsequently attacking an order already made.

This case is significant for clarifying the approach to direct appeals to the Constitutional Court against interim relief orders, particularly in urgent matters. It reinforces that such appeals will only be entertained in exceptional circumstances and that the interests of justice are paramount. The judgment provides important guidance on the factors to consider when deciding whether to grant leave to appeal interim relief decisions, including: the final effect of the order; irreparable harm; prospects of success; whether the appeal would usurp the review court's role; and the importance of not anticipating the outcome of pending review proceedings. The case also emphasizes the constitutional imperative that court orders must be complied with, and that state entities cannot simply ignore judgment debts. It demonstrates that while procedural irregularities in execution processes (like non-compliance with the State Liability Act) are serious matters implicating the rule of law, they must be balanced against the enforceability of court orders and access to justice. The judgment is also significant for its application of res judicata principles to settlement orders and its clarification that once a settlement agreement is made an order of court, it can only be set aside through proper legal processes.